COVID-19’s Effect: Industry Update from IPC

Picture of Foodservice potatoes being sold in retail at an HEB store in Austin, TX.Foodservice product being sold in retail at an HEB store in Austin, TX.

Frank Muir, President/CEO of Idaho Potato Commission (IPC) sent us the following update on March 26th, 2020.:

Retail sales are surging driven by current panic as well as the number of meals now prepared at home. Last week was up 72% even with the challenge of keeping shelves full.

The IPC retail field team is contacting every retail customer and encouraging them to expand their bulk offerings given the limitation shippers have of producing bags in the quantity currently needed. A one-pager to guide them is being sent with follow-up assistance being provided. Example pictures of how other retailers are addressing their empty shelves is provided as well.

The Foodservice marketplace has taken a significant decrease as bars and restaurants have either been ordered closed or to adhere to take-out and drive-through orders only, which is challenging for some. Business is off 75% in most cases. Business travel is basically non-existent.

There have already been closures and thousands of people laid-off and furloughed, not knowing what locations or jobs will come back. This has led to a shift for value, positively impacting retail sales of potatoes. While QSR’s drive most frozen French Fry volumes and will have slight declines in volume, other segments like casual dining, fast casual, and institutional, will likely see significant decreases. Over 50% of all consumers consider restaurant dining as a risk to their health now, further impacting Foodservice sales. Yelp also saw a 160 percent increase in interest for grocery stores from March 8 to March 18. Additionally, with most K-12 schools and colleges closed, and some states with stay-at-home orders, those food sales are now going to the retail sector, with people eating at home.

International business in Asia has become secondary as refrigerated container supply has disappeared with a backlog at Chinese ports and a surge in demand at retail domestically. Additionally, in Latin America the dollar has strengthened significantly jumping 35% in the past week alone. News of shippers cutting orders was to be expected and we anticipate this to continue for a couple weeks as COVID-19 continues to wreak havoc on pricing.

It is difficult to say how long these dynamics will last; however, we believe that they will have an immediate negative impact, especially on Foodservice demand, and that volumes could be lower as a result.

Longer term however, several things could occur, such as: potato consumption at home increases, given Americans’ “rediscovery” of our value, nutrition, and versatility and pent-up demand for Foodservice causes a greater increase in dining out and thereby increases potato sales.

Frank W. Muir
President/CEO
Idaho Potato Commission

Foodservice product being sold in retail at Walmart in Columbus, OH.

Foodservice product being sold in retail at Walmart in Columbus,
OH.